2019 (8) TMI 1101 - AT - Central Excise

Valuation - submerged arc welded pipes to the extent of charges paid for outsourced inspection by agencies on the insistence of some customers - section 4 of Central Excise Act, 1944 - HELD THAT - Transaction value is the price that is paid, or payable, for the goods procured by the customers - It is not in dispute that the testing agency, even if nominated by customers, is compensated for by none other than the appellant and that the amount is recovered from the customers as a cost of production and supply. It would, therefore, appear that the assessable value, as computed by the lower authorities, does reflect the transaction value. Appeal dismissed - decided against appellant.

Summary

Issues:
Non-discharge of duty liability on 'submerged arc welded pipes' for outsourced inspection charges paid by the appellant.

Analysis:
The appeal concerns the non-discharge of duty liability on 'submerged arc welded pipes' due to charges paid for outsourced inspection by agencies on customers' insistence. The dispute, spanning from February 2008 to October 2008, revolves around recovering ?1,35,718/-, along with interest and penalties under rule 25 of Central Excise Rules, 2002.

The appellant's counsel argues that the decisions cited by the first appellate authority are not applicable due to peculiar circumstances or issues not under consideration. On the other hand, the Authorized Representative contends that the disputed amount was collected from customers as consideration for the goods, emphasizing that all costs in the sale of goods must be included for assessable value computation.

The Tribunal notes that the 'transaction value' includes all costs involved in the sale of goods. Previous decisions highlight that inspection charges are to be included in the assessable value, as affirmed by the Supreme Court. The Tribunal clarifies that the 'normality' mandating inclusion of testing and other payments to third parties should not be adopted for subsequent clearances.

The Tribunal emphasizes that 'transaction value' encompasses all amounts payable by the buyer in connection with the sale of goods, even if indirectly benefiting the dealer. Such charges, including those for post-sale services, form part of the assessable value, benefiting the manufacturer indirectly.

The Tribunal concludes that the assessable value computed by lower authorities reflects the transaction value, as per the extensive and inclusive definition of 'transaction value.' Therefore, the appeal is dismissed, finding no reason to interfere with the impugned order.

In summary, the Tribunal upholds that inspection charges paid for by the appellant, even if nominally by customers, are to be included in the assessable value of goods. The decision is based on the comprehensive definition of 'transaction value,' emphasizing the inclusion of all costs related to the sale of goods, even if indirectly benefiting the dealer.